Cherkizovo, the Russia-based meat processor, has snapped up local grain supplier NAPCO.
The company will pay RUB5bn (US$87.9m) for NAPCO’s equity and take on the firm’s debt, which stood at RUB751m at the end of March.
NAPCO has been one of Cherkizovo’s grain suppliers. The meat group said around 10% of the grain it buys each year comes from NAPCO.
Sergey Mikhailov, Cherkizovo’s CEO said the acquisition of NAPCO was part of its strategy to use M&A to make the business more vertically integrated.
“While organic growth remains our priority, this acquisition represents an excellent example of the strategic M&A opportunities we are ready to explore to further strengthen our vertical integration, supply chain and business model generally. By extending our land bank we will increase our self-sufficiency in grain and focus on synergies and efficiencies to reduce our unit production costs. Following this acquisition, we expect to increase our self-sufficiency in grain to 60% in the next few years from 30% at the end of 2016.”